The Panamanian Parliament today approved in the first reading bill 654 that establishes the method to calculate the rent subject to a tax exemption or preferential treatment for assignment or exploitation of intangible assets, informed the Legislative Body.
The legal initiative was endorsed by the legislative committee of Economy and Finance with seven votes in favor and one abstention, and will now be submitted to the plenary session for its second and third and last readings.
The bill establishes the obligation that taxpayers benefit from keeping their accounting records in a proper manner that allows determining the connection between income derived from the assignment or exploitation of a qualified intangible asset, as well as losses.
It also provides sanctions in case of non-compliance with the obligations established in the legislation.
The representative of the Ministry of Economy and Finance (MEF), Eduardo Cedeño, said in the debate that the objective is to encourage those taxpayers who carry out this type of activity.
Cedeño explained that the incentive will be applied whenever it is proven that there is a relationship between the total income derived from intellectual property activity and the expenses generated by research and development.
During the session, it was highlighted that several special regimes of the Panama Regime were submitted to the review of the Forum on Pernicious Fiscal Practices of the Organization for Economic Cooperation and Development (OECD).
As a result, a series of recommendations were issued to be implemented as a deadline on December 31, 2018, according to a statement from the National Assembly (AN, Parliament).
In this regard, Cedeño said it is "vitally important" that the recommendations given be met in compliance with the provisions of our legal system, which, he said, it is necessary to approve a rule that establishes the method to calculate the income subject to an exemption or preferential tax treatment for the assignment or exploitation of intangible assets.
In the first debate of bill 654, it was said that intangible assets are usually identifiable assets, of a non-monetary nature and without physical appearance.
Intangible assets are classified as identifiable: trademarks, copyrights, licenses for use; and not identifiable: advertising, organization expenses, among others.
The bill is aimed to carry out the valuation of operations of agreed between related parties located in these zones or special areas or in other jurisdictions under the principle of free competition.
This seeks to avoid manipulating the prices under which goods or services are exchanged in such a way that taxpayers increase their costs or deductions or decrease their taxable income to the detriment of the country's tax collection, the statement said.